December 2004
Activity in the region’s manufacturing sector continues to expand, according to
firms surveyed for this month’s Business Outlook Survey. Most indicators pointed
to continued expansion in December, with increases recorded in the indexes for
general activity, new orders, and shipments. Nearly one-quarter of the firms
reported higher employment. The survey’s price measures suggest continued cost
pressures, but there was a slight moderation in upward price pressure for final
manufactured goods. Expectations for overall manufacturing growth remained
positive, although most indicators fell from their November readings.
Current Indicators Are Higher This Month
The diffusion index of current activity, the broadest measure of manufacturing
conditions, increased from 20.7 in November to 29.6 this month. The index has
remained positive for 19 consecutive months and is at its highest reading in
five months (see Chart). The percentage of firms reporting increases in activity
this month (37 percent) exceeded the percentage reporting decreases (8 percent).
The new orders and shipments indexes also showed improvement this month: The new
orders index increased four points, and the shipments index increased nearly
eight points. Corroborating the stronger growth in broad indicators, December’s
index for unfilled orders was positive for the first time in three months.
Delivery times remained steady. The inventory index declined one point and has
been in negative territory for the past two months.
Continued expansion in manufacturing is evident in responses regarding
employment and hours worked. The percentage of firms reporting increased
employment (24 percent) was higher than the percentage reporting lower
employment (10 percent). Still, the employment diffusion index, positive for 15
consecutive months, fell three points. More firms reported longer work hours
this month (21 percent) than shorter work hours (3 percent). The current
workweek index increased 18 points to its highest reading in 10 months.
Price Pressures Moderate Slightly
Firms continued to report higher production costs this month. Fifty-four percent
reported higher prices for inputs, but the diffusion index for prices paid
declined two points to its lowest reading in five months.
Firms also reported higher prices for their own manufactured goods. Twenty-five
percent reported higher prices for their manufactured products; 5 percent
reported lower prices. The diffusion index for current prices received, however,
fell eight points and is now at its lowest reading in eight months.
Six-Month Forecasts Are Less Optimistic
Overall expectations for the next six months remain generally optimistic,
although the index for future activity fell this month: from 52.1 in November to
41.2 (see Chart). Other broad future indicators showed similar declines: The
future new orders index fell 11 points, and the future shipments index fell 14
points. Firms expect unfilled orders to increase modestly over the next six
months and delivery times to hold near their current levels. The percentage of
firms that expect inventories to increase over the next six months (18 percent)
is about the same as the percentage expecting them to decrease (19 percent).
Firms’ expectations for future employment dipped somewhat this month. The future
employment index decreased from 29.2 in November to 21.4 in December. A little
less than one-third of the firms anticipate adding workers over the next six
months. On balance, firms expect average work hours to increase somewhat over
the next six months. Thirty-six percent of the firms expect higher capital
spending over the next six months, and the future capital spending index edged
slightly higher this month.
In special questions this month, firms were asked about the impact of the recent
declines in the value of the dollar on their businesses: the impact of higher
prices for imports and lower export prices as well as the net effect of the
changes (see Special Questions). With regard to imports, 54 percent of the firms
indicated negative effects from the falling dollar, while only 9 percent
indicated some positive effects. With regard to exports, 38 percent indicated
positive effects and 7 percent negative effects. When asked to balance the net
effect of the changes, the firms were almost evenly divided between those
reporting net negative effects (31 percent) and those reporting net positive
effects (29 percent).
Summary
Most indicators of current activity improved this month and continue to reflect
growth in the region’s manufacturing sector. At least 37 percent of the firms
reported an increase in general activity, new orders, and shipments in December.
Employment increased again this month. Price pressures are still evident in
firms’ survey responses, but price indicators showed a slight moderation.
Although manufacturers are generally optimistic about growth in their sector,
expectations for the next six months fell somewhat in December.
Special Questions (December)
The value of the dollar has recently declined on a trade-weighted basis.
Considering both the cost of imported products and the exports of your own
products, which of the following best characterizes the effect of the decline in
the dollar on your business?
Effect on your business of |Net Effect on
change in |your business
Import prices Exported Products |
Substantial negative effect 10.1% 2.6% | 7.5%
Some negative effect 44.3% 3.9% | 23.7%
No effect 25.3% 38.9% | 32.5%
Some positive effect 5.1% 27.3% | 21.3%
Substantial positive effect 3.8% 10.4% | 7.5%
Not applicable 11.4% 16.9% | 7.5%
Total 100.0% 100.0% | 100.0%
Special note: The survey’s annual historical revisions, which incorporate new
seasonal adjustment factors, will be released on January 13, 2005, at noon E.T.
The information will be made available at
http://www.PhiladelphiaFed.org/econ/bos/boshistory.html.
December 2004
Dec. vs Nov. | Six Months from now vs Dec.
|
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Busines 20.7 37.2 54.3 7.7 29.6 | 52.1 53.8 32.6 12.6 41.2
Conditions |
|
New Orders 22.1 40.8 44.8 14.4 26.4 | 56.6 57.4 26.6 11.3 46.1
|
Shipments 24.5 39.0 49.7 7.0 32.0 | 51.8 54.0 26.7 15.8 38.3
|
Unfilled Orders -1.2 20.3 65.7 12.5 7.7 | 22.9 18.7 64.7 12.3 6.4
|
Delivery Times -4.7 13.9 71.2 14.8 -0.9 | 4.9 13.5 67.0 13.6 -0.1
|
Inventories -6.1 16.2 56.7 23.8 -7.5 | 9.2 18.3 56.7 19.4 -1.1
|
Prices Paid 53.9 54.3 42.3 2.1 52.2 | 51.1 68.2 24.2 4.5 63.7
|
Prices Received 28 24.6 68.2 4.6 20.0 | 46.3 47.3 38.6 7.6 39.7
|
Number of Emp. 17.4 24.3 66.1 9.6 14.7 | 29.2 31.3 53.0 9.9 21.4
|
Avg. Emp. Wrkwk 0.6 21.4 72.7 2.9 18.6 | 16.6 18.5 62.6 12.2 6.3
|
Capital Ex. -- -- -- -- -- | 25.5 35.8 39.2 8.6 27.2
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through December 13, 2004.
November 2004
Activity in the region's manufacturing sector continues to expand, according to
firms surveyed for this month's Business Outlook Survey. Although indicators for
general activity, new orders, and shipments fell from their October readings,
they remain at relatively high levels. Firms continued to report a rise in
prices for inputs and finished goods, although the price indexes for both fell
slightly this month. The region's manufacturing executives were significantly
more optimistic this month about future manufacturing growth
than in October.
Current Indicators Reflect Continued Expansion
The diffusion index of current activity, the survey's broadest measure of
overall manufacturing conditions, decreased from 28.5 in October to 20.7 in
November. The index has remained positive for 18 consecutive months (see Chart).
The percentage of firms reporting an increase in activity (35 percent) was down
slightly from last month (40 percent). The survey's other broad indicators
remained positive but declined slightly. The new orders index fell almost three
points, and the shipments index fell four points. Unfilled orders remained
steady; about the same percentage of firms reported increases and decreases. The
inventory index declined nine points and fell into negative territory for the
first time in eight months. The percentage of firms reporting declines in
inventories (22 percent) slightly exceeded the percentage reporting increases
(16 percent).
Continued expansion in manufacturing is evident in responses regarding
employment. The percentage of firms reporting increased employment (20 percent)
was higher than the percentage reporting lower employment (2 percent). The
employment diffusion index, positive for 14 months, rose three points. About the
same percentage of firms (18 percent) reported longer work hours and shorter
work hours.
Price Pressures Moderate Slightly
Firms continued to report higher production costs this month. Fifty-six percent
of the firms reported higher prices for inputs, but the diffusion index for
prices paid declined three points, to its lowest reading in three months.
Firms also reported higher prices for their own manufactured goods. Nearly 36
percent reported higher prices for their manufactured products; 8 percent
reported lower prices. The diffusion index for current prices received, however,
declined five points and is at its lowest reading in five months.
In a special question this month, firms were asked about their expectations for
further cost increases next year (see Special Questions). Ninety percent of the
executives polled expect raw material prices (including energy) to increase next
year, with the largest percentage (40 percent) indicating they anticipate a rise
between 5 to 10 percent. Twenty-four percent of the firms, however, expect raw
material and energy costs to rise more than 10 percent. Almost all the firms (96
percent) expect health-benefit costs to rise next year; over half of the
respondents expect these costs to rise more than 10 percent. With regard to
wages and salaries, 90 percent of the firms expect these costs to rise between 1
to 5 percent next year. Firms were also asked whether the expected rise in input
costs has lowered production plans for 2005. Two-thirds of the firms indicated
that they have not altered production plans; 30 percent indicated that
production will be lower because of these expected higher costs.
Manufacturing Optimism Boosted
Overall expectations for the next six months improved markedly. The future
general activity index jumped from 27.6 to 52.1, near its reading of three
months ago (see Chart). Nearly 60 percent of the manufacturing executives expect
increases in activity over the next six months, compared to 40 percent in the
previous month. Other future indicators showed similar increases: both the
future new orders and future shipments indexes jumped 17 points. Moreover, firms
expect unfilled orders to rise and delivery times to lengthen over the next six
months. Indicators for future delivery times and inventories returned to
positive territory this month.
Expectations regarding future employment showed some improvement this month. The
future employment index increased from 23.2 in October to 29.2 in November. A
little more than one-third of the firms anticipate adding workers over the next
six months. On balance, firms expect average work hours to increase over the
next six months. Thirty-four percent of the firms expect higher capital spending
over the next six months, compared with 30 percent last month. The future
capital spending index increased about four points this month.
Summary
Although some indicators of current business conditions declined from their
readings in October, all indicators point to continued growth in the region's
manufacturing sector. At least 35 percent of the firms reported an increase in
general activity, new orders, and shipments in November. Employment increased
again this month. Price pressures are still evident in firms' survey responses,
but price indicators showed a slight moderation. Firms' responses indicate that
significant cost increases for raw materials, energy, and health benefits are
expected to continue next year. Despite evidence of moderation in the pace of
growth this month, manufacturing executives expressed increased optimism about
growth over the next six months.
Special Questions (October 2004)
1. What percentage change in costs do you expect for the following categories
in 2005?
No change Increase
1-5% 5-10% >10%
Raw Materials (including energy) 4.0% 26.0% 40.0% 24.0%
Intermediate goods 22.0% 38.0% 28.0% 4.0%
Health benefits 0.0% 8.0% 36.0% 52.0%
Non-health benefits (including pensions) 28.0% 44.0% 20.0% 0.0%
Wages and salaries per worker 4.0% 90.0% 2.0% 0.0%
Professional services and transportation 14.0% 50.0% 26.0% 4.0%
Row totals do not add to 100 percent because some firms did not respond or
reported that they expect price decreases (less than 2 percent).
2. To what extent has any expected rise in input costs lowered your production
plans for 2005?
Not at all 66.0%
Slightly 18.0%
Moderately 10.0%
Significantly 2.0%
No Response 4.0%
Total 100.0%
Summary of Returns
November 2004
Nov. vs Oct. | Six Months from now vs Nov.
|
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Busines 28.5 35.4 48.4 14.7 20.7 | 27.6 59.7 27.9 7.7 52.1
Conditions |
|
New Orders 24.6 41.4 39.4 19.2 22.1 | 40.1 64.2 21.5 7.6 56.6
|
Shipments 28.2 38.9 45.1 14.4 24.5 | 34.7 61.2 23.1 9.3 51.8
|
Unfilled Orders -5.4 16.5 59.8 17.7 -1.2 | 8.1 31.1 55.6 8.1 22.9
|
Delivery Times -0.2 12.7 68.7 17.4 -4.7 | -0.2 19.7 61.5 14.8 4.9
|
Inventories 3.1 16.4 60.5 22.4 -6.1 | -9.5 25.9 53.9 16.7 9.2
|
Prices Paid 57.1 56.1 40.9 2.1 53.9 | 50.2 58.4 32.3 7.3 51.1
|
Prices Received 32.7 35.8 56.4 7.8 28.0 | 38.6 51.8 42.8 5.5 46.3
|
Number of Emp. 14.1 19.7 78.1 2.3 17.4 | 23.2 33.7 57.9 4.5 29.2
|
Avg. Emp. Wrkwk 6.5 18.1 61.4 17.6 0.6 | 16.3 25.1 59.7 8.5 16.6
|
Capital Ex. -- -- -- -- -- | 21.1 34.3 35.2 8.8 25.5
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through November 15, 2004.
October 2004
Activity in the region’s manufacturing sector continued to improve, according to
firms surveyed for this month’s Business Outlook Survey. About 40 percent of the
firms reported increases in overall activity, new orders, and shipments in
October. Employment indexes were positive again this month. Firms continued to
report a rise in prices for inputs and finished goods, although the price index
for finished goods fell slightly this month. The region’s manufacturing
executives were less optimistic about overall manufacturing growth over the next
six months, although special questions in this month’s survey suggest that
fourth-quarter production plans have been boosted recently.
Current Indicators Reflect Growth
The diffusion index of current activity, the survey’s measure of overall
manufacturing conditions, increased from 13.4 in September to 28.5 (see Chart).
The percentage of firms reporting increases in activity (40 percent) exceeded
the percentage reporting decreases (11 percent) for the 17th consecutive month.
The new orders index declined two points, but about 40 percent of the firms said
new orders were higher this month. The index for current shipments increased six
points this month. More firms reported declines in unfilled orders (24 percent)
than reported increases (18 percent), and the unfilled orders index fell about
nine points. Delivery times remain steady; about the same percentage of firms
report shorter and longer delivery times (13 percent).
The overall improvement in manufacturing is evident in responses regarding
employment. The percentage of firms reporting increased employment (22 percent)
was higher than the percentage reporting decreased employment (8 percent).
Still, the employment diffusion index, positive for 13 months, fell seven
points. Similarly, the average workweek index remained positive but declined two
points.
Manufacturing Prices Continue to Rise
Firms continue to report higher production costs. Nearly 58 percent of the firms
reported higher input prices in October, and less than 1 percent reported lower
prices. The prices paid diffusion index was mostly unchanged this month. Still,
the index is 26 points higher than at the end of last year. Nearly 36 percent of
the firms reported higher prices for their own manufactured goods this month;
only 3 percent reported lower prices. The prices received index fell, however,
more than three points.
Future indicators for manufacturing prices were slightly higher than their
levels in September. Over the next six months, a significant percentage of firms
expect increases in input prices (58 percent) and increases in prices for their
own manufactured goods (44 percent).
Six-Month Forecast Is Less Optimistic
Overall expectations for the next six months remain generally optimistic,
although the index for future activity fell again this month. The future general
activity index decreased from 44.9 in September to 27.6 in October, the lowest
reading in 20 months (see Chart). Other broad future indicators showed more
moderate declines (the future new orders index was virtually unchanged and the
future shipments index fell three points). Firms expect unfilled orders to
increase modestly over the next six months and delivery times to hold near their
current levels. More firms expect inventories to decrease over the next six
months (28 percent) than expect them to increase (19 percent).
Firms’ expectations for future employment held steady this month. The future
employment index remained near its reading in September with almost one-third of
the firms expecting employment to rise over the next six months. Firms, on
balance, expect average work hours to increase as well. The future capital
spending index increased four points, with about 30 percent expecting increases
in capital spending in the next six months.
In special questions this month, firms were asked about their production plans
for the rest of this year (see Special Questions). More firms indicated that
they have recently increased than decreased plans for fourth-quarter production
(38 percent versus 13 percent). Thirty-five percent of the firms said
fourth-quarter production would increase, compared with about 19 percent who
said it would decrease. In response to the same question about inventories,
percentages were almost evenly divided between those that said inventories would
increase in the fourth quarter (32 percent) and those that said inventories
would decrease (29 percent).
Summary
Most indicators of current activity improved this month and continue to reflect
growth in the region’s manufacturing sector. At least 40 percent of the firms
reported increases in general activity, new orders, and shipments in October.
Employment increased again this month, but fewer firms reported increases this
month than last month. Indicators for manufacturing prices suggest that cost
increases are continuing to place upward pressure on prices of manufactured
goods. Although manufacturers are generally optimistic about growth in their
sector, expectations for the next six months fell notably in October.
Special Questions (October 2004)
1. In the past several months, have your plans for fourth quarter production:
Increased 38.1%
Decreased 13.4%
Stayed the same 45.4%
No Response 3.1%
Total 100.0%
2. For the fourth quarter, production and inventories of finished goods are
expected to:
Production Inventories
Increase more than 10% 5.2% 3.1%
Increase 5-10% 17.5% 14.4%
Increase less than 5% 12.4% 14.4%
Decline less than 5% 4.1% 13.4%
Decline 5-10% 11.3% 8.3%
Decline more than 10% 3.1% 7.2%
Stay at current levels 39.2% 34.0%
No Response 7.2% 5.2%
Total 100.0% 100.0%
Summary of Returns
October 2004
Oct. vs. Sept. | Six Months from now vs Oct.
|
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Busines 13.4 39.6 49.4 11.0 28.5 | 44.9 40.1 45.7 12.5 27.6
Conditions |
|
New Orders 26.4 39.8 40.5 15.1 24.6 | 40.4 47.6 41.5 7.5 40.1
|
Shipments 22.4 41.5 42.2 13.4 28.2 | 37.2 44.4 42.5 9.7 34.7
|
Unfilled Orders 3.1 18.1 58.3 23.6 -5.4 | 6.7 21.8 60.4 13.7 8.1
|
Delivery Times 4.4 13.1 72.6 13.3 -0.2 | 0.5 16.5 62.3 16.7 -0.2
|
Inventories 3.7 22.4 58.0 19.3 3.1 | -2.8 18.9 50.3 28.4 -9.5
|
Prices Paid 56.4 57.6 41.1 0.4 57.1 | 47.4 58.3 31.3 8.0 50.2
|
Prices Received 36.1 35.8 60.0 3.1 32.7 | 36.4 44.0 50.2 5.4 38.6
|
Number of Emp. 21.5 21.7 70.6 7.7 14.1 | 23.4 32.3 58.6 9.1 23.2
|
Avg. Emp. Wrkwk 8.3 21.2 64.1 14.7 6.5 | 14.4 25.9 61.0 9.5 16.3
|
Capital Ex. -- -- -- -- -- | 17.1 30.3 44.4 9.2 21.1
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through October 15, 2004.
September 2004
Activity in the region’s manufacturing sector continues to improve, according to
firms surveyed for this month’s Business Outlook Survey. Although the indicator
for general activity fell from its August reading, indicators for new orders and
employment improved. Firms reported an increase in industrial prices again this
month. Expectations for overall manufacturing growth remain positive, although
most indicators fell from their August readings.
Current Indicators Are Mixed
The diffusion index of current activity, which measures firms’ overall appraisal
of current economic conditions, decreased from a reading of 28.5 in August to
13.4 in September. The index has remained positive for 16 consecutive months but
is now at its lowest reading since July 2003 (see Chart). The new orders index,
however, increased seven points, suggesting that demand for manufactured goods
remains robust. Nearly 40 percent of the firms surveyed reported growth in new
orders this month; 13 percent reported declines. The current shipments index
paralleled the decline in the general activity index, decreasing nearly 10
points. Indexes for delivery times, unfilled orders, and inventories all showed
increases this month and all are slightly above zero.
Despite the moderation in manufacturing output growth, employment edged higher
this month. The current employment diffusion index increased four points. The
percentage of firms reporting increased employment this month (31 percent) was
higher than the percentage reporting lower employment (10 percent). The average
workweek remained positive and was virtually unchanged from its reading in
August.
Price Indexes Drift Higher
Firms continue to report higher production costs. Nearly 58 percent of the firms
reported higher input prices this month, and only 1 percent reported lower
prices. The prices paid diffusion index edged up three points and has increased
for two consecutive months. The index is at its highest reading since May and
is 26 points higher than at the end of last year.
Forty percent of the firms reported higher prices for their own manufactured
goods this month; only 4 percent reported lower prices. The current prices
received index, which edged up two points this month, is now at its highest
reading since 1989.
Six-Month Forecast Is Less Optimistic
Overall expectations for the next six months remain generally optimistic,
although most indicators for future conditions were lower this month. The future
general activity index decreased from 52.7 in August to 44.9 this month, but it
remains at a relatively high level (see Chart). Other future indicators showed
declines as well: the future new orders index fell eight points and the future
shipments index fell 13 points. Indexes for future unfilled orders, future
delivery times, and future inventories fell from their readings in August.
Expectations regarding future employment also decreased this month. The future
employment index decreased from 26.6 in August to 23.4 in September. Thirty-four
percent of the firms expect employment to rise in the next six months, while 11
percent expect it to decline. Although the average workweek index edged lower,
firms expect the average workweek to increase over the next six months. The
future capital spending index fell back about four points. Twenty-seven percent
of firms expect higher capital spending over the next six months; 10 percent
expect it to decline.
In special questions this month, firms were asked about the impact of special
depreciation allowances on new capital equipment. Recent legislation provided
temporary bonus depreciation allowances for capital placed in service before
January 1, 2005. Twenty-four percent of the firms indicated that capital
equipment spending was higher in 2004 because of the special allowances. About
27 percent of the firms indicated that capital spending in the fourth quarter of
this year will be higher than it would have been without the special allowances.
Firms were also asked about their capital spending plans for 2005 compared to
2004. Nearly 56 percent of the firms anticipate that capital spending will be
higher next year than this year (23 percent say it will increase significantly
and 33 percent expect only a slight increase). About 30 percent foresee no
change; 15 percent think spending will be lower.
Summary
Although some indicators of current business conditions declined from their
readings in August, all indicators point to continued growth in the region’s
manufacturing sector. New orders growth continues to show improvement, and a
sizable share of firms are expanding payrolls. Manufacturing firms face
continuing cost pressures, and about 40 percent of firms reported increases in
the prices of their manufactured goods this month. Firms’ expectations for
growth over the next six months fell in September but remain generally
optimistic.
Special Questions (September 2004)
1. Have the special depreciation allowances for new capital equipment purchased
before January 1, 2005, increased your level of spending on capital equipment
since the beginning of 2004?
Yes 24.4%
No 73.9%
No Response 1.7%
Total 100.0%
2. As a result of the special allowances, will capital spending in the fourth
quarter of this year be higher than it would have been otherwise?
Yes 27.0%
No 71.3%
No Response 1.7%
Total 100.0%
3. How do you expect your firm's spending on new plant and equipment to change
for 2005 compared with your expected spending for 2004?
Increase significantly 22.6%
Increase slightly 33.0%
No change 29.6%
Decrease slightly 7.8%
Decrease significantly 7.0%
Total 100.0%
Summary of Returns
September 2004
Sept. vs. Aug. | Six Months from now vs Sept.
|
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Busines 28.5 29.5 52.4 16.1 13.4 | 52.7 50.6 39.9 5.7 44.9
Conditions |
|
New Orders 19.2 39.6 44.0 13.2 26.4 | 48.1 51.0 35.0 10.6 40.4
|
Shipments 32.0 39.1 44.2 16.7 22.4 | 50.3 50.0 31.5 12.8 37.2
|
Unfilled Orders 2.1 18.7 65.6 15.7 3.1 | 17.4 23.3 54.4 16.6 6.7
|
Delivery Times -6.8 13.4 76.6 9.0 4.4 | 3.8 16.4 62.9 15.9 0.5
|
Inventories 1.7 19.5 63.1 15.9 3.7 | 4.4 22.4 48.1 25.2 -2.8
|
Prices Paid 53.7 57.8 39.5 1.4 56.4 | 47.2 52.8 38.4 5.4 47.4
|
Prices Received 34.1 39.9 55.9 3.8 36.1 | 40.5 40.5 52.4 4.1 36.4
|
Number of Emp. 17.2 31.0 59.6 9.5 21.5 | 26.6 34.4 51.3 11.0 23.4
|
Avg. Emp. Wrkwk 8.0 21.7 62.7 13.4 8.3 | 18.2 27.5 55.1 13.2 14.4
|
Capital Ex. -- -- -- -- -- | 21.4 26.9 49.3 9.8 17.1
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through September 13, 2004.
August 2004
Activity in the region’s manufacturing sector continues to expand, according to
firms surveyed for this month's Business Outlook Survey. Most of the survey’s
broad indicators of activity, however, suggest a more moderate pace of growth
than in July. Indicators for new orders, shipments, and employment remained
positive but fell from their readings in July. Firms continue to report a rise
in prices for inputs and for their own finished goods. Despite the decline in
the survey’s indicators for current activity, expectations for general growth
over the next six months remain very positive.
Pace of Growth Moderates
The diffusion index of current general activity, the broadest measure of
manufacturing conditions, decreased from 36.1 in July to 28.5 in August,
suggesting slower growth. The index has remained positive for 15 consecutive
months. The new orders and shipments indexes also remained positive but fell
back from their readings in July. The current new orders index fell notably, by
16 points (see Chart), to its lowest reading in three months. The current
shipments index fell, but by a more modest nine points. Corroborating the slower
growth in the broad indicators, the indexes for both delivery times and unfilled
orders fell this month. The delivery times index dropped below zero for the
first time in seven months and fell 22 points from its July reading. The
unfilled orders index fell 17 points. The overall moderation in manufacturing is
evident in responses about employment. The percentage of firms reporting
increased employment this month (24 percent) was higher than the percentage
reporting lower employment (7 percent). Still, the employment diffusion index
fell seven points. The average workweek index remained positive this month as
well but fell four points from July’s reading.
Price Indexes Are Higher
Again Survey responses suggest upward pressure on costs as well as on the prices
of manufactured goods. Nearly 55 percent of the firms reported higher input
prices this month, and only 1 percent reported lower prices. The prices paid
diffusion index increased from 46.3 in July to 53.7, its highest reading in
three months. Thirty-eight percent of the firms reported higher prices of their
own manufactured goods this month; only 4 percent reported lower prices. The
prices received index was up slightly from July’s reading, which was the highest
since 1989. Expectations for future prices inched higher again this month. The
future prices paid index increased three points, and the future prices received
index increased nine points. Both indexes have increased about 12 points over
the past three months. In special questions this month, firms were asked about
one aspect of cost increases since the beginning of the yearthe rise in
compensation per worker (see Special Questions). Seventy-eight percent of
respondents indicated that compensation per worker had risen since the beginning
of the year. Forty-eight percent indicated that compensation per worker had
risen at the same rate as productivity growth. The firms were nearly evenly
divided with regard to whether compensation per worker had grown faster (26
percent) or slower (24 percent) than the rate of productivity. A larger
percentage of firms attributed the rise in compensation per worker to higher
benefit costs (31 percent) than higher wages (15 percent), while 52 percent
indicated both factored equally.
Optimism Improves
Despite the moderation in current activity, overall expectations for the next
six months remain optimistic and, in fact, improved notably this month. The
future general activity index increased 16 points, rising from 36.3 in July to
52.7 this month, the highest reading in seven months. Nearly 55 percent of the
manufacturing executives expect increases in business activity over the next six
months; only 2 percent expect decreases. Other future indicators showed similar
improvement this month. The future new orders index increased 17 points, and
the future shipments index increased 12 points (see Chart). Expectations
regarding future employment improved slightly this month. The future employment
index also increased six points, and 32 percent of the manufacturers plan to add
to their payrolls over the next six months.
Summary
Indicators continue to point to expansion of the region’s manufacturing sector,
although indicators for general activity, new orders, and shipments declined
from their readings in July. Firms reported higher prices for inputs and for
their own manufactured goods again this month. Despite evidence of moderation in
the pace of growth this month, manufacturing executives expressed increased
optimism about growth over the next six months.
Special Questions (August 2004)
Has compensation per worker (wages plus benefits) risen at your firm since the
beginning of 2004?
Percentage
Yes 77.7%
No 20.5%
No response 1.8%
Total 100.0%
If yes, is compensation per worker increasing [choice] the rate of productivity growth?
The same as 48.3%
Faster than 26.4%
Slower than 24.1%
No response 1.2%
Total 100.0%
If compensation per worker is rising, what is the primary reason?
Higher benefit costs 31.0%
Higher Wages 15.0%
Both Equally 51.7%
No response 2.3%
Total 100.0%
Summary of returns
August 2004
August vs July | Six Months from now vs August
|
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Business 36.1 37.2 54.1 8.7 28.5 | 36.3 54.5 38.7 1.8 52.7
Conditions |
|
New Orders 35.3 36.3 44.8 17.2 19.2 | 31.6 55.0 33.6 6.8 48.1
|
Shipments 41.3 44.2 42.8 12.3 32.0 | 38.4 55.6 32.6 5.3 50.3
|
Unfilled Orders 19.4 17.6 63.0 15.5 2.1 | 4.0 29.7 54.5 12.3 17.4
|
Delivery Times 15.3 7.0 79.3 13.8 -6.8 | -5.9 20.4 57.0 16.6 3.8
|
Inventories 4.1 22.3 57.0 20.6 1.7 | 2.7 28.3 41.9 23.9 4.4
|
Prices Paid 46.3 54.7 42.9 1.0 53.7 | 44.5 52.2 36.3 5.1 47.2
|
Prices Received 33.1 37.8 58.4 3.7 34.1 | 31.9 45.3 44.8 4.8 40.5
|
Number of Emp. 24.6 23.9 69.5 6.6 17.2 | 20.9 32.2 54.3 5.5 26.6
|
Avg. Emp. Wrkwk 12.3 15.1 75.4 7.2 8.0 | 4.3 22.5 65.3 4.4 18.2
|
Capital Ex. -- -- -- -- -- | 28.0 28.4 45.8 7.0 21.4
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through August 16, 2004.
July 2004
Activity in the region’s manufacturing sector continued to improve,
according to firms surveyed for this month’s Business Outlook Survey. The
survey’s broad indicators of activity increased from their readings in June, and
firms reported increases in employment as well. Firms continued to report a rise
in prices for inputs and finished goods, although the input price index fell
slightly this month. The region’s manufacturing executives were slightly less
optimistic this month about overall manufacturing growth than in June, but
expectations remained positive.
New Orders and Shipments Are Rising
The diffusion index of current activity, the survey’s measure of overall
manufacturing conditions, increased from 28.9 in June to 36.1. The percentage of
firms reporting increases in activity (47 percent) exceeded the percentage
reporting decreases (11 percent) for the 14th consecutive month and is at its
highest reading in six months (see Chart). The new orders and shipments indexes
showed notable improvement this month. The new orders index increased 11 points,
while the shipments index increased 15 points. Firms reported a rise in unfilled
orders and longer delivery times. The inventory index fell 15 points but
remained positive for the fourth consecutive month.
The overall improvement in manufacturing has been evident in responses regarding
employment. The percentage of firms reporting increased employment this month
(31 percent) exceeded the percentage reporting decreased employment (6 percent).
The employment diffusion index, which has now been positive for 10 consecutive
months, increased from 16.8 in June to 24.6 (its highest reading in the history
of the series). The average workweek index remained positive and near its
reading in the previous two months.
Special questions this month asked firms about conditions in the labor market
(see Special Questions). In the past three months, 35 percent of firms have
needed to increase wages in order to retain or attract workers. Among those
firms for which wage increases were necessary, 84 percent reported that the rate
of increase was less than 4 percent. The
remaining 16 percent indicated that the rate exceeded 4 percent.
Firms Report Higher Prices
Firms continue to report higher production costs again this month. Fifty percent
of the firms reported higher prices for purchased inputs in July, but that is
down slightly from the 60 percent in the previous month. The prices paid
diffusion index fell from 51.9 in June to 46.3 this month.
Nearly 34 percent of firms reported that prices for their own manufactured goods
were higher this month, while less than 1 percent reported lower prices. The
prices received index increased from 26.3 in June to 33.1 this monthits highest
reading since 1989. Expectations for future prices inched higher this month. The
future prices paid index increased five points and the future prices received
index increased about three points.
Expectations Moderate Slightly
Overall expectations for the next six months remain generally optimistic,
although some future indicators fell slightly again this month. The future
general activity index decreased slightly, from 39.5 in June to 36.3 (see
Chart). Fifty-one percent of firms expect an expansion in activity over the next
six months and only 15 percent expect a contraction. The future new orders index
declined five points, but the future shipments index was virtually unchanged.
Expectations regarding future employment remained optimistic, although the
employment diffusion index decreased slightly this month (from 23.2 in June to
20.9). The percentage of firms expecting higher employment over the next six
months (33 percent) exceeds the percentage expecting lower employment (12
percent).
Summary
Most current indicators improved this month and continue to reflect growth in
the region’s manufacturing sector. Indicators for general activity, new orders,
and shipments all rose from their readings in June. The current employment index
also showed notable improvement. Indicators for manufacturing prices suggest
that recent cost increases are continuing to place upward pressure on prices of
manufacturing goods. Manufacturing executives remain generally optimistic about
continued growth in their sector over the next six
months, although expectations have moderated from recent higher levels.
Special Questions (July 2004)
In the past 3 months, have you had to increase wages or wage offers to retain
or attract new workers?
Percentage
Yes: 34.9%
No: 65.1%
Total 100.0%
If yes, by how much?
0-2% 13.2%
2-4% 71.1%
4-6% 13.1%
6-8% 2.6%
more than 8% 0.0%
Total 100.0%
Summary of Returns
July 2004
July vs June | Six Months from now vs July
|
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Busines 28.9 47.3 40.8 11.2 36.1 | 39.5 50.7 28.7 14.5 36.3
Conditions |
|
New Orders 24.0 48.3 37.6 13.0 35.3 | 36.4 51.0 20.8 19.4 31.6
|
Shipments 26.2 48.8 43.5 7.5 41.3 | 38.0 52.8 24.2 14.4 38.4
|
Unfilled Orders 14.2 27.5 60.5 8.0 19.4 | 2.4 23.2 51.1 19.1 4.0
|
Delivery Times 6.4 23.4 65.8 8.1 15.3 | -5.5 12.9 64.5 18.9 -5.9
|
Inventories 19.0 23.2 55.3 19.1 4.1 | 1.0 25.2 45.1 22.5 2.7
|
Prices Paid 51.9 50.1 45.2 3.7 46.3 | 39.7 52.1 34.7 7.6 44.5
|
Prices Received 26.3 33.6 60.4 0.5 33.1 | 28.6 39.7 45.5 7.8 31.9
|
Number of Emp. 16.8 30.7 63.2 6.1 24.6 | 23.2 32.6 50.0 11.8 20.9
|
Avg. Emp. Wrkwk 13.0 22.3 67.8 9.9 12.3 | 8.6 23.6 55.1 19.3 4.3
|
Capital Ex. -- -- -- -- -- | 18.6 33.1 39.8 5.1 28.0
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through July 12, 2004.
June 2004 Business Outlook Survey
Activity in the region's manufacturing sector continues to expand,
according to firms surveyed for this month's Business Outlook Survey. Most
indicators improved on their May readings and employment indexes remained
positive. Firms continue to report a rise in prices for inputs and finished
goods, although price indexes fell slightly from their recent highs. The
region's manufacturing executives remain generally optimistic that business
conditions will improve over the next six months.
New Orders and Shipments Still Rising
The diffusion index of current activity, the survey's broadest measure of
manufacturing conditions, increased from 23.8 in May to 28.9 this month (see
Chart). The percentage of firms reporting increases (41 percent) exceeded the
percentage reporting decreases (12 percent) for the 13th consecutive month. The
new orders and shipments indexes also showed improvement this month, both
increasing 6 points. Firms reported higher unfilled orders this month and longer
delivery times, suggesting continued strength in manufacturing. Notably, the
current inventories index remained positive for the third consecutive month and
increased almost 10 points.
The overall improvement in manufacturing has been evident in responses regarding
employment. The percentage of firms reporting increased employment this month
(26 percent) was higher than the percentage reporting lower employment (9
percent). Still, the employment diffusion index, positive for nine consecutive
months, fell six points. The average workweek index remained positive and near
its reading in May.
Manufacturing Prices Continue to Rise
Firms reported higher costs again this month. Nearly 60 percent of the firms
reported paying higher prices for raw materials and other inputs, and only 8
percent reported paying lower prices. The prices paid diffusion index, which had
risen about 30 points since the end of last year, fell from a high reading of
59.6 in May to 51.9 this month.
Over one-third of the firms reported that prices of their own manufactured goods
were higher this month, while only 8 percent reported lower prices. The prices
received index fell slightly from its 15-year high of 29.1 in May to 26.3 this
month.
Six-Month Forecasts Moderate Slightly
Overall expectations for the next six months remain optimistic, although some
future indicators fell slightly from their readings in May. The future general
activity index decreased from 42.3 in May to 39.5 this month (see Chart).
Fifty-one percent of the firms expect increased activity over the next six
months; 11 percent expect a decline. The future shipments and new orders indexes
fell about three points, but remain at relatively high levels.
Expectations regarding future employment also showed a slight moderation this
month. The future employment diffusion index decreased five points, but the
percentage of firms expecting higher employment over the next six months (31
percent) exceeds the percentage expecting lower employment (8 percent).
In a special question this month, firms were asked their current rate of plant
utilization compared with six months ago (see Special Questions). Currently, 64
percent of the firms indicated that they were operating at capacity utilization
rates of greater than 75 percent. In contrast, only 38 percent reported capacity
rates of greater than 75 percent six months ago. Twenty-four percent of firms
indicated current capacity utilization rates of greater than 90 percent,
compared with only 9 percent of firms six months ago. Firms were also asked
about what share of their plant and equipment had become obsolete in the past
year. Sixty-three percent of the firms indicated that 5 percent or less of their
capital had become obsolete in the past year. The remaining 37 percent of the
firms reported higher percentages of capital obsolescence. Only 17 percent
indicated that the rates were higher than for a normal year.
Summary
Most current indicators improved this month and continued to reflect growth in
the region's manufacturing sector. Indicators for general activity, new orders,
and shipments all rose from their readings in May. On balance, firms added to
their payrolls again this month. Firms reported higher prices for inputs and
their own manufactured goods, although diffusion indexes fell back from their
high readings in May. Manufacturing executives remain generally optimistic about
continued growth in manufacturing over the next six months.
______________________________
Special Questions (June 2004)
1. Which of the following best characterizes your capacity utilization rate?
Current (%) 6 Months ago (%)
Less than 60 8 15
60-65 8 7
65-70 9 16
70-75 11 24
75-80 12 9
80-85 18 13
85-90 10 7
90-95 10 4
95-100 14 5
Total 100 100
2. What percent of your plant and equipment has become obsolete in the
past year?
0% 25%
1-5% 38%
5-10% 22%
10-15% 13%
>15% 2%
Total 100%
Is this higher than normal?
Yes 17%
No 83%
Summary of Returns
June 2004
June vs May | Six Months from now
| vs June
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Busines 23.8 40.5 44.8 11.6 28.9 | 42.3 50.7 30.1 11.2 39.5
Conditions |
|
New Orders 18.3 40.8 41.1 16.8 24.0 | 39.7 53.1 19.3 16.7 36.4
|
Shipments 20.2 43.7 36.8 17.5 26.2 | 41.3 55.2 17.5 17.2 38.0
|
Unfilled Orders 12.8 24.9 60.4 10.7 14.2 | 13.8 22.3 47.0 19.9 2.4
|
Delivery Times 8.4 15.3 74.6 9.0 6.4 | 3.8 12.7 61.0 18.1 -5.5
|
Inventories 9.2 29.3 58.7 10.3 19.0 | 4.6 25.4 40.2 24.5 1.0
|
Prices Paid 59.6 59.6 32.4 7.8 51.9 | 35.8 47.9 37.5 8.2 39.7
|
Prices Received 29.1 33.9 58.5 7.6 26.3 | 29.0 35.9 48.0 7.3 28.6
|
Number of Emp. 22.6 26.0 63.9 9.2 16.8 | 28.2 30.9 52.7 7.8 23.2
|
Avg. Emp. Wrkwk 12.7 25.9 58.2 13.0 13.0 | 5.6 22.7 52.8 14.0 8.6
|
Capital Ex. -- -- -- -- -- | 21.6 26.4 35.6 7.8 18.6
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through June 14, 2004.
May 2004
Activity in the region's manufacturing sector continues to expand, according to
firms surveyed for this month's Business Outlook Survey. Although indicators for
general activity and new orders fell from their April readings, they remained at
relatively high levels. The employment index, positive again this month,
increased substantially from April's reading. The input prices that
manufacturers face continued to rise and a sizable share of manufacturers
reported increases in their own final goods. Expectations for overall
manufacturing growth over the next six months remain high, and almost 40 percent
of the firms expect employment to increase.
Growth Continues but Indicators Fall Back Some
The diffusion index of current activity, the survey's broadest measure of
manufacturing conditions, decreased from 32.5 in April to 23.8 this month (see
Chart). Although growth this month did not match the stronger pace of growth
reported in April, the percentage of firms reporting increases (41 percent)
exceeded the percentage reporting decreases (17 percent) for the 12th
consecutive month. Both the new orders index and the shipments index showed a
similar pattern, each falling about eight percentage points. Firms reported
higher unfilled orders this month and longer delivery times, suggesting
continued strength. The current inventories index remained positive for the
second consecutive month.
There was a notable improvement in manufacturing employment at the firms in our
survey this month. Thirty-four percent of the manufacturers reported higher
employment, and 11 percent reported lower employment. The current employment
diffusion index jumped from 12.2 to 22.6, its highest reading since April 1973.
Respondents also reported that the average workweek expanded again this month.
The workweek index rose from 10.4 to 12.7.
Manufacturing Prices Continue to Rise
A larger share of manufacturers are facing higher costs this month, and a
significant share of firms reported higher prices for their own manufactured
goods. Sixty-two percent of the manufacturers reported higher input prices, and
only 3 percent reported lower prices. The prices paid diffusion index increased
from 51.9 in April to 59.6. The index has now remained positive for 10
consecutive months and has risen almost 30 points since the end of last year.
Nearly 35 percent of firms reported that prices of their own manufactured goods
were higher this month, compared with 28 percent in April. The prices received
index jumped from 13.7 in April to 29.1 in May, its highest reading since
February 1989. The index has been positive for 10 consecutive months.
Six-Month Forecasts Remain Optimistic
Overall expectations for the next six months remain optimistic. The future
general activity index increased from 33.6 in April to 42.3 this month.
Fifty-eight percent of the firms expect increased activity over the next six
months; 16 percent expect declines. The future shipments index increased about
two points, but the future new orders index was virtually unchanged.
Expectations regarding future employment are quite positive. The future
employment index increased slightly, from 26.7 to 28.2. Almost 38 percent of the
firms expect to add workers over the next six months, and only 9 percent expect
to make cuts. A slightly higher percentage of firms expect to increase the
average employee workweek (20 percent) than expect to decrease it (14 percent).
In a special question this month, firms were asked about the impact of recent
cost increases on expected price increases for their products over the next
three months (see Special Questions). Although 39 percent of respondents expect
steady prices for their own goods over the next three months, 56 percent
indicated that they expect increases (26 percent expect increases of 5 percent
or less; 30 percent expect increases of greater than 5 percent). Nearly 49
percent of the firms indicated they have already increased prices since the
beginning of the year. Thirty-nine percent of the firms are currently
experiencing shortages or delayed delivery of critical raw materials, and over
half of these firms reported that these problems have affected rates of
production.
Summary
The region's manufacturing sector expanded again this month, but the pace of
growth was slower than in April. Although the general activity index from our
survey fell this month, it has remained positive for 12 consecutive months. The
indicator for current employment showed notable improvement in May. Widespread
increases in prices for raw materials and other inputs were reported again this
month, and a larger share of firms reported increases in their own manufactured
goods. Manufacturing executives remain optimistic about growth in their sector
over the next six months.
Special Questions (May 2004)
1. Many firms have been reporting price increases for raw materials and energy
since the beginning of the year. What impact will these recent price increases
have on the prices of your finished products over the next three months?
We expect steady prices for our goods. 39.3%
We expect price increases of approximately:
0-5% 25.6%
5-10% 21.4%
10-15% 8.6%
No response 5.1%
Total 100.0%
Since the beginning of the year, we have already increased our prices by:
0-5% 26.5%
5-10% 14.5%
10-15% 4.3%
> 15% 3.4%
Total 48.7%
2. Are you currently experiencing shortages or delayed delivery of any
critical raw materials?*
Yes 39.1%
No 60.9%
If yes, have these problems affected rates of production?
Yes 55.6%
No 44.4%
* The most frequently cited raw materials were steel and steel-related
products (such as scrap, stainless, and wire rod) followed by wood or lumber
products.
Summary of Returns
May 2004
May vs. April | Six Months from now
|
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Busines 32.5 41.1 41.6 17.3 23.8 | 33.6 58.0 22.5 15.7 42.3
Conditions |
|
New Orders 26.1 40.9 36.4 22.6 18.3 | 40.8 54.8 25.1 15.1 39.7
|
Shipments 27.7 40.7 37.8 20.5 20.2 | 39.5 56.4 23.8 15.1 41.3
|
Unfilled Orders -2.5 29.4 51.7 16.6 12.8 | 16.7 30.8 45.4 17.0 13.8
|
Delivery Times 0.8 19.1 68.8 10.7 8.4 | 6.0 20.4 55.6 16.6 3.8
|
Inventories 11.7 27.9 52.9 18.6 9.2 | -4.2 27.3 45.0 22.7 4.6
|
Prices Paid 51.9 62.2 35.2 2.6 59.6 | 50.5 45.8 41.6 9.9 35.8
|
Prices Received 13.7 34.6 59.4 5.5 29.1 | 20.5 36.6 51.8 7.6 29.0
|
Number of Emp. 12.2 34.0 54.6 11.4 22.6 | 26.7 37.6 47.5 9.3 28.2
|
Avg. Emp. Wrkwk 10.4 27.2 57.4 14.5 12.7 | 15.7 19.6 60.2 14.0 5.6
|
Capital Ex. -- -- -- -- -- | 30.3 29.3 35.9 7.7 21.6
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through May 14, 2004.
April 2004
Activity in the region's manufacturing sector continues to expand, according to
firms surveyed for this month's Business Outlook Survey. Most of the survey's
broad indicators of activity increased from their readings in March. Firms
continue to report a rise in prices for inputs and for finished goods, although
price indexes fell back from their recent highs. Expectations for overall growth
over the next six months remain optimistic, and there is some modest improvement
in expectations for capital spending this month.
Broad Indicators Show Improvement
The survey's broadest measure of manufacturing conditions, the diffusion index
for current activity, increased from 24.2 to 32.5 this month. This marked the
11th consecutive month the index has been positive (see Chart). Both the new
orders index and the shipments index also showed improvement this month. The new
orders index rose four points, to 26.1, and the current shipments index
increased five points, to 27.7. Indexes from the survey suggest that unfilled
orders were mostly steady and delivery times were unchanged. The current
inventories index showed a notable increase, rising from -12.8 in March to 11.7
this month, its highest reading in 16 months.
The overall improvement in manufacturing is also evident in firms' responses
regarding employment. Although the manufacturing employment index was virtually
unchanged this month, the index has been positive for seven consecutive months.
Twenty-three percent of the manufacturers reported higher employment this month;
11 percent reported lower employment. Although the workweek index fell nearly
eight points, it still indicates that overall work hours were higher this month.
The index has remained positive for 10 consecutive months.
Firms Report Higher Costs
Firms reported higher costs again this month, but slightly less pressure on
their own output prices. Over 57 percent of the firms surveyed reported higher
input prices, and only 5 percent reported lower prices. Nevertheless, the prices
paid diffusion index, now positive for nine consecutive months, fell a modest
1.5 points.
Twenty-eight percent of the firms reported that prices of their own manufactured
goods were higher this month, while 14 percent reported lower prices. The
current prices received index fell from 22.6 in March (its highest reading since
January 1995) to 13.7 this month.
Firms Remain Generally Optimistic
Overall expectations for the next six months remain optimistic. While the
diffusion index for future activity decreased from 36.7 to 33.6, it remains at a
generally healthy level. Some future indicators improved this month: the future
new orders index increased seven points and the future shipments index increased
three points. Firms expect unfilled orders to increase over the next six months
and delivery times to increase modestly. The future inventory index suggests
that little change in inventories is expected over the next six months.
Firms remain generally optimistic about employment increases over the next six
months. The percentage of firms expecting to increase employment (40 percent)
exceeded the percentage expecting to decrease employment (14 percent). The
future employment diffusion index was unchanged, remaining at the relatively
high reading of 26.7. The future capital spending index showed a rise of six
points this month, to its highest reading in over four years.
Special questions this month asked firms about their experiences filling recent
job openings (see Special Questions). Forty-two percent of the firms indicated
that they had recently experienced problems filling job openings because
applicants lacked qualifications. The most frequently cited skills that
applicants lacked were skills in the use of production machines; specific plant
operator skills; and basic skills in reading, writing, and math. Respondents
were asked about whether the gap between required skills and available skills
has changed over time. While only 8.5 percent of firms indicated that the gap is
greater than it was last year, over 53 percent said it is greater than it was
five years ago.
Summary
Most current indicators improved this month and continued to reflect growth in
the region's manufacturing sector. Indicators for general activity, new orders,
and shipments all rose from their readings in March. Although firms reported an
increase in input prices again this month, price pressures for their own
manufactured goods were less than reported in the previous month. The current
employment index held steady this month but continues to reflect an improving
employment situation. Firms remain generally optimistic about continued growth
in manufacturing over the next six months.
Special Questions (April 2004)
1. Has your firm experienced problems filling job openings in the past three
months because applicants did not have sufficient qualifications?
Percent
Yes 42.0%
No 36.1%
Have had no openings 21.9%
100.0%
If yes, what are the three most significant skill categories that applicants
are lacking:
Percent of firms choosing
specific skill category*
Skills in the use of production machines or tools 76.4%
Specific plant and system operator skills 50.9%
Basic skills (reading, writing, math) 40.0%
Supervisory, management, or admin. skills 23.6%
English language skills 14.5%
Computer Skills 9.1%
*The totals sum to more than 100% because each participant could cite up to
three categories.
2. In general, how has the gap between required skills and available skills
changed over the following periods?
Now, compared Now, compared
to last year to five years ago
Smaller 14.1% 20.5%
Same 77.4% 26.2%
Larger 8.5% 53.3%
100.0% 100.0%
April 2004
April vs. March | Six Months from now
| vs. April
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Busines 24.2 44.3 43.8 11.8 32.5 | 36.7 51.1 27.7 17.5 33.6
Conditions |
|
New Orders 21.9 41.8 42.5 15.7 26.1 | 33.6 55.2 26.4 14.4 40.8
|
Shipments 22.3 46.5 34.7 18.8 27.7 | 36.3 56.2 23.8 16.7 39.5
|
Unfilled Orders 8.8 20.6 55.6 23.1 -2.5 | 12.4 29.2 56.2 12.5 16.7
|
Delivery Times 19.0 12.8 71.8 12.0 0.8 | 7.5 20.0 63.5 14.0 6.0
|
Inventories -12.8 29.6 52.4 17.9 11.7 | -0.8 21.6 51.7 25.8 -4.2
|
Prices Paid 53.4 57.3 37.4 5.3 51.9 | 55.3 56.3 30.9 5.7 50.5
|
Prices Received 22.6 27.6 58.6 13.8 13.7 | 28.2 36.7 42.3 16.2 20.5
|
Number of Emp. 12.3 23.1 65.7 10.9 12.2 | 26.7 40.3 43.0 13.6 26.7
|
Avg. Emp. Wrkwk 17.9 20.5 69.4 10.1 10.4 | 12.7 32.3 44.7 16.6 15.7
|
Capital Ex. -- -- -- -- -- | 24.4 35.6 35.8 5.2 30.3
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through April 9, 2004.
March 2004
Activity in the region's manufacturing sector continues to improve, according to
firms surveyed for this month's Business Outlook Survey. Although indicators
for general activity and new orders fell from their February readings, they
remain at relatively high levels. The employment index was positive again this
month, but gains were modest. Firms reported an increase in industrial prices
again this month. Expectations for overall manufacturing growth remain
positive, although most indicators continued to fall from their higher readings
at the end of last year. Employment plans, however, showed modest improvement
this month.
Indicators Decline but Manufacturing Is Still Expanding
The diffusion index of current general activity, the survey's broadest measure
of manufacturing conditions, decreased from 31.4 in February to 24.2 this
month. The index has been positive for 10 consecutive months. The new orders
index declined nearly six points this month, and the current shipments edged
only slightly higher. By historical standards the indexes for general activity,
new orders, and shipments remain at high levels and continue to suggest solid
gains in manufacturing. Both unfilled orders and delivery times continue to
rise according to the manufacturers surveyed. The delivery time index is now at
its highest reading since March 1973.
On balance, manufacturing employment edged higher again this month. The
percentage of firms reporting increased employment (24 percent) is higher than
the percentage reporting lower employment (12 percent). The employment diffusion
index, now positive for six consecutive months, held close to its reading in
February. The average work hours index remains positive but fell about 6 points.
Firms Report Higher Prices
Firms reported higher costs again this month. Over 55 percent of the firms
reported higher input prices, and only 2 percent reported lower prices. The
prices paid diffusion index has been positive for eight consecutive months and
has increased considerably since January (see Chart). The index is now at its
highest reading since January 1995.
Twenty-eight percent of the firms reported that prices of their own manufactured
goods were higher this month, while 6 percent reported lower prices. The
current prices received index edged higher this month (see Chart) and is also at
its highest reading since January 1995.
Six-Month Forecast Is Less Optimistic
Expectations remain generally optimistic, but most indicators of future
conditions were lower this month. The future general activity index decreased
from 51.4 in February to 36.7 this month. Although the future new orders index
fell nearly 22 points, 49 percent of the firms still expect growth in the next
six months. The future shipments index decreased more moderately-about 12
points. Firms expect unfilled orders to increase over the next six months, and
delivery times are expected to be longer. Firms forecast inventories to remain
near their current levels.
Despite the decline in most of the other future indicators, firms' expectations
regarding employment improved this month. The future employment index increased
from 19.5 to 26.7. Nearly 37 percent of the firms expect employment to rise in
the next six months, although 10 percent expect employment to decline.
Firms were asked special questions this month regarding their experience in
filling recent job openings (see Special Questions). Seventy-three percent of
the firms indicated that they have had job openings in the past three months.
The most frequently cited problem in filling such positions is a lack of
qualified applicants (89 percent). Nearly 41 percent of the firms indicated
that they have filled recent openings with temporary or contract workers.
Almost 77 percent of firms anticipate openings over the next six months,
although 33 percent of these positions may be filled with temporary or contract
workers.
Summary
Indicators continue to point to an expansion of the region's manufacturing
sector. Although indicators for general activity and new orders declined this
month, they remain at relatively high levels. Respondents also reported that
employment increased again this month, although the gains were modest. A
growing percentage of firms have been reporting increases in input prices and
higher prices of their own manufactured goods. The manufacturing executives'
outlook for overall growth was less optimistic this month, although their
employment forecast improved modestly.
Special Questions (March 2004)
1. Have you had any job openings in the last three months?
Yes 73.2% No 26.8%
2. What problems, if any, have you had filling job openings in the past three
months?*
Lack of qualified applicants 89.2%
Applicants' salary requirements too high 16.2%
Applicants had other opportunities 13.5%
Other 2.7%
* Total percentage is greater than 100% because some firms chose more than one|
problem.
3. Have you filled any recent openings with temporary or contract workers?
No 59.5%
Yes, to fill what are usually temp positions 21.5%
Yes, not ready to take on permanent workers in these positions 13.9%
Yes, could not find permanent workers 5.1%
4. Do you expect openings in the next six months?
Yes 76.8% No 23.2%
5. Are you planning to fill any of them with temporary or contract workers?
Yes 32.5% ? No 67.5%
March 2003
March vs. February | Six Months from now
| vs. March
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Busines 31.4 43.1 38.1 18.8 24.2 | 51.4 48.6 31.5 12.0 36.7
Conditions |
|
New Orders 27.8 43.6 33.3 21.7 21.9 | 55.3 48.5 28.2 15.0 33.6
|
Shipments 19.3 43.2 34.0 20.9 22.3 | 48.6 52.7 22.3 16.4 36.3
|
Unfilled Orders 4.4 24.9 54.8 16.1 8.8 | 25.7 23.5 56.6 11.1 12.4
|
Delivery Times 7.2 24.9 66.7 5.8 19.0 | 13.6 15.3 66.3 7.8 7.5
|
Inventories 0.8 14.0 57.1 26.8 -12.8 | 14.0 22.2 48.9 23.0 -0.8
|
Prices Paid 43.7 55.8 41.8 2.4 53.4 | 53.8 57.0 29.9 1.7 55.3
|
Prices Received 18.9 28.2 63.8 5.6 22.6 | 37.3 33.8 50.1 5.6 28.2
|
Number of Emp. 12.5 23.9 62.5 11.6 12.3 | 19.5 36.6 42.4 9.9 26.7
|
Avg. Emp. Wrkwk 23.6 31.8 46.2 13.9 17.9 | 15.4 25.5 51.9 12.8 12.7
|
Capital Ex. -- -- -- -- -- | 24.1 27.3 32.9 2.9 24.4
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through March 12, 2004.
February 2004
Activity in the region's manufacturing sector continues to expand, according to
firms surveyed for this month's Business Outlook Survey. Although indicators
for general activity, new orders, and shipments fell from their January
readings, they remain at relatively high levels. For the fifth consecutive
month more firms reported increases in employment than reported declines, and a
larger percentage of firms reported higher average work hours this month. Firms
reported an increase in input prices again this month and some upward pressure
on prices of their own manufactured goods. Expectations for overall growth over
the next six months remain very positive, and about one-third of the firms
expect employment to increase.
Growth Continues but Some Indicators Fall Back
The diffusion index of current general activity, the survey's broadest measure
of manufacturing conditions, decreased from 38.8 in January to 31.4 and has now
been positive for nine consecutive months (see chart). Although some current
indicators fell this month, they continue to reflect solid growth in the
region's manufacturing sector. The new orders index fell nearly 9 points, and
the shipments index fell almost 14 points. Still, both indicators remain at
relatively high levels. Firms reported an increase in unfilled orders and
essentially steady inventories this month. The delivery times index, at 7.2, is
at its highest reading since January 1999.
Manufacturing employment at the firms in our survey has improved recently.
Although the current employment index fell this month, the continued positive
reading suggests that labor market conditions have stabilized, especially in the
last three months. Notably, the average workweek diffusion index increased
nearly 11 points, to its highest reading in the history of the series.
Price Indexes Drift Higher
Firms reported higher costs again this month. Over 46 percent reported higher
input prices, and only 3 percent reported lower prices. The prices paid
diffusion index increased for the seventh consecutive month. Twenty-four
percent of firms reported that prices for their own manufactured goods were
higher this month, while 5 percent reported lower prices. The current prices
received index is now at its highest reading since January 1985.
Firms' expectations regarding future price increases continue to drift higher.
The future prices paid index has now risen for six consecutive months. Both the
future prices paid and prices received indexes have increased 13 points since
December.
Manufacturers Are Still Optimistic
Overall expectations for the next six months remain optimistic, although a few
indicators were slightly lower this month than last. The future general
activity index decreased from 53.9 in January to 51.4 this month, but it remains
at a relatively high level (see chart). The future new orders index actually
increased 6 points and the future shipments index was mostly unchanged. Firms
expect unfilled orders to increase over the next six months, and delivery times
will be longer. More firms (39 percent) expect inventories to increase over the
next six months than to decrease (25 percent). The future inventory index has
trended higher over the last six months and is now at its highest reading since
1984. In response to the special questions this month (see Special Questions),
37 percent of the firms expect to increase inventories over the next three
months and 48 percent expect to increase inventories over the next six months.
The most important factors cited by firms for deciding on inventory adjustments
were new orders, deliveries to customers, change in customer inventories, and
seasonal conditions.
Firms' expectations regarding employment improved slightly this month: the
future employment index increased 4 points in February. The percentage of firms
expecting to increase employment over the next six months (33 percent) exceeds
the percentage expecting to decrease employment (13 percent).
Firms' expectations for capital spending declined only slightly this month: 30
percent indicated they will increase capital spending over the next six months;
only 6 percent will decrease such spending.
Summary
Current indicators this month suggest that growth in the region's manufacturing
is continuing, but the pace was slightly slower this month. Indicators for
general activity, new orders, and shipments, nevertheless, remain at relatively
high levels. Respondents to the survey reported that employment and average
work hours increased this month, and indexes for both unfilled orders and
delivery times indicate expanding manufacturing activity. Firms reported
higher prices for inputs, however, and more firms reported higher prices of
their own manufactured goods. Manufacturing executives' outlook for growth
continued to be favorable, and firms were slightly more optimistic about future
employment at their plants.
Special Questions February 2004
1. For each time period (the next 3 months and the next 6 months), how much do
you expect inventories of your finished goods to change?
3 mo. 6 mo.
Increase more than 10% 9.6% 7.0%
Increase 5-10% 8.4% 18.6%
Increase less than 5% 19.3% 22.1%
Stay at current levels 37.3% 24.4%
Decline less than 5% 13.4% 10.5%
Decline 5-10% 4.8% 8.1%
Decline more than 10% 7.2% 9.3%
Total 100% 100%
2. What are the three most important factors to your firm in determining
short-run changes in inventories of your finished goods?
% of firms choosing this factor % choosing factor as the most
important
New orders 70.6% 31.8%
Delivery time to custimers 47.1% 18.8%
Change in customer inventories 47.1% 11.8%
Seasonal factors 42.4% 18.8%
Concern about unfilled orders 34.1% 7.1%
Other 18.8% 11.8%
* Percentages total is greater than 100% because firms could choose more than
one factor.
February 2004
February vs. January | Six Months from now
| vs. February
|
Prev. | Prev.
Diff. Inc. No ch Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index Index | Index Index
|
General Busines 38.8 42.3 46.9 10.8 31.4 | 53.9 60.7 26.5 9.3 51.4
Conditions |
|
New Orders 36.5 40.7 46.5 12.8 27.8 | 49.8 63.8 25.7 8.5 55.3
|
Shipments 33.1 35.2 46.9 15.9 19.3 | 49.7 58.7 28.0 10.2 48.6
|
Unfilled Orders 10.7 20.4 62.3 16.0 4.4 | 17.2 33.6 51.7 7.9 25.7
|
Delivery Times -2.0 19.2 68.7 12.1 7.2 | 11.5 21.5 67.9 7.9 13.6
|
Inventories -3.9 24.9 50.3 24.1 0.8 | 8.7 39.1 30.9 25.2 14.0
|
Prices Paid 35.3 46.2 49.9 2.5 43.7 | 44.3 57.2 37.7 3.5 53.8
|
Prices Received 9.4 23.6 70.2 4.7 18.9 | 29.8 42.2 48.5 4.9 37.3
|
Number of Emp. 17.5 20.9 68.9 8.4 12.5 | 15.1 32.7 51.3 13.2 19.5
|
Avg. Emp. Wrkwk 12.9 26.7 63.8 3.1 23.6 | 16.7 22.0 65.0 6.6 15.4
|
Capital Ex. -- -- -- -- -- | 26.0 30.1 36.5 6.0 24.1
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through February 13, 2004.
Business Outlook Survey
January 2004
The recent improvement in the region’s manufacturing sector continued into the
new year. Nearly half of the firms reported increases in activity and new
orders in January. Employment indexes were positive again this month. Firms
reported an increase in input prices this month, and there are recent signs of
pressure on prices for their own manufactured goods. Expectations for growth
over the next six months remain optimistic, although some indicators of future
activity fell from their recent high readings. Capital spending plans, however,
showed continued improvement this month.
Manufacturing Continues to Improve
The diffusion index of current general activity, the survey’s broadest measure
of manufacturing conditions, increased from a revised reading of 30.3 in
December to 38.8 for the first month of 2004.* The index has remained positive
for eight consecutive months (see Chart). The index for new orders fell
slightly from its revised reading of 37.9 in December to 36.5 in January.
Still, 49 percent of the firms reported an increase in new orders this month.
The diffusion index for current shipments also remained at a high level,
although it fell more than 6 points. For the eighth consecutive month, more
firms reported an increase in unfilled orders (24 percent) than reported a
decrease (14 percent). Delivery times and inventories are nearly steady this
month.
There has been a notable improvement in manufacturing employment at the firms in
our survey over the past two months. Although the current employment index fell
from 19.4 in December to 17.5 this month, these are the highest readings since
October 1988. Firms reported that the average workweek expanded again this
month, although the current workweek index declined 3 points from a relatively
high reading in December.
Cost Pressures Still in Evidence
Firms reported higher costs again this month. Nearly 40 percent of the firms
reported higher input prices this month, and only 4 percent reported lower
prices. The prices paid diffusion index increased for the sixth consecutive
month. Twenty-four percent of firms reported that prices for their own
manufactured goods were higher this month, although 15 percent reported lower
prices. The current prices received index increased again this month and is now
at its highest reading since April 2000.
Firms’ expectations regarding future price increases continue to move up. The
future prices paid index has increased 13 points over the past three months, and
the future prices received index has increased 18 points over the same period.
Six-Month Forecasts Still Optimistic
Manufacturers begin 2004 with continued optimism about growth over the next six
months, although many future indicators were slightly lower than last month.
The future general activity index decreased slightly from 55.2 in December to
53.9 this month, but it remains at a relatively high level (see Chart). The
future new orders index fell nearly 5 points and the future shipments index fell
4 points. Firms expect unfilled orders to increase over the next six months,
and delivery times will be longer. More firms (27 percent) expect inventories
to increase over the next six months than to decrease (18 percent).
Firms’ expectations regarding future employment have shown some moderation in
the last three months. The percentage of firms expecting to increase employment
over the next six months (28 percent) still exceeds the percentage expecting
employment to decrease (13 percent). The future employment index, however, fell
again this month and has declined 17 points over the last three months.
Firms’ expectations for capital spending showed improvement for the fourth
consecutive month (the diffusion index for future capital spending has increased
14 points over the past three months). In special questions this month, firms
were asked about their six- to 12-month plans for spending on new plant and
equipment (see Special Questions). Fifty-eight percent of the firms expect to
increase such spending over the next six to 12 months; 13 percent expect to
decrease it. Among those firms that have not yet placed the orders to carry out
those plans, 50 percent expect to do so in the first quarter and 39 percent
expect to do so in the second quarter. The most frequently cited factors for
increased spending in 2004 were expected high sales growth, the need to replace
capital goods, and a high rate of current capacity utilization. The most
frequently cited factors for not increasing spending were low capacity
utilization and expected low sales growth.
Summary
The Business Outlook Survey’s current economic indicators suggest that the
expansion of the region’s manufacturing sector is continuing. Indicators for
general activity, new orders, and shipments remain at relatively high levels.
Respondents also reported that employment increased again this month. In
general, manufacturing executives’ outlook for future growth continued to be
optimistic. Moreover, their outlook for capital spending over the next six
months is showing signs of improvement.
*The survey's annual historical revisions, which incorporate new seasonal
adjustment factors, were released on January 8, 2004. The information is
available at: http://www.phil.frb.org/econ/bos/boshistory.html. Revisions for
selected series from 1996 to 2003 are listed on pages 3-4 of this release.
Special Questions (January 2004)
How do you expect your firm’s spending on new plant and equipment to change over
the next six to 12 months relative to your actual spending over the past six to
12 months?
Increase 58.2%
Decrease 12.7%
No change 29.1%
If you plan to increase capital spending and have not already started to place
the necessary orders, when do you expect to start placing these orders?
2004:Q1 50.0%
2004:Q2 38.5%
2004:Q3 11.5%
2004:Q4 0%
January 2004
Business Outlook Survey
Summary of Returns
January vs. December | Six Months from Now
| vs. January
|
Prev. | Prev.
Diff. Inc. No ch. Dec. Diff. | Diff. Inc. No ch. Dec. Diff.
Index* Index | Index* Index
|
General Busines 30.3 49.2 34.7 10.3 38.8 | 55.2 64.4 17.5 10.4 53.9
Conditions |
|
New Orders 37.9 49.2 38.1 12.7 36.5 | 54.6 61.3 23.8 11.5 49.8
|
Shipments 39.6 44.8 40.3 11.7 33.1 | 54.0 60.8 25.7 11.1 49.7
|
Unfilled Orders 15.5 24.3 62.1 13.6 10.7 | 22.6 29.5 54.5 12.3 17.2
|
Delivery Times 0.5 7.5 80.7 9.5 -2.0 | 2.6 21.4 63.1 9.9 11.5
|
Inventories -6.7 19.2 56.0 23.1 -3.9 | 8.4 26.9 48.7 18.2 8.7
|
Prices Paid 30.9 39.5 54.1 4.2 35.3 | 41.0 48.7 36.7 4.5 44.3
|
Prices Received 6.4 24.0 59.6 14.6 9.4 | 23.1 38.7 45.7 8.9 29.8
|
Number of Emp. 19.4 19.4 74.2 1.9 17.5 | 17.5 28.0 55.9 12.9 15.1
|
Avg. Emp. Wrkwk 16.1 19.2 74.5 6.3 12.9 | 24.6 24.3 61.6 7.6 16.7
|
Capital Ex. -- -- -- -- -- | 21.5 30.7 49.6 4.8 26.0
*December data were revised, along with historical data, to incorporate
new seasonal adjustment factors (see note above).
Notes: (1) Items may not add to 100 percent because of omission by respondents.
(2) All data are seasonally adjusted.
(3) Diffusion indexes represent the percentage of respondents indicating
an increase minus the percentage indicating a decrease.
(4) Survey results reflect data received through January 12, 2004.